Recurrent RAI financial crisis explained.

Think twice about taking an IOU from RAI. The Italian State's former broadcasting monopoly is in deep financial trouble. Semi-sacred Christmas bonuses were chopped for all 13,000 employees, there is a total ban on overtime. Some 700 jobs were lost in 1993 and at least another 500 will go this year.

Last December an RAI spokesman claimed that, without government intervention, the state broadcaster would not have the money to meet last month's and this month's payrolls. Debt, he said, was at a record 1,500 billion Lire -- around $900 million. RAI losses for '93 alone were estimated to have hit 560 billion Life.

RAI President Claudio Dematte explained to employees why they were not going to see their Christmas extra -- equal to one month's pay: "The cash box is empty and the banks have closed the door on us."

He went on to point out that things will be getting worse, not better. If the government did not step in, he said, projected RAI losses in 1994 would jump a terrifying 34 per Sent, to 755 billion Life,

The broadcaster was lobbying for its own Christmas bonus from the State in the form of a government salvage package and had an interest in black pessimism. Still, Dematte was not bluffing. RAI finances are a mess.

To make matters worse, the Italian Government, looking at some empty bank accounts of its own, was in the end far less generous than RAI had hoped and, probably, expected.

The government came out with a decree on the 29th of December which should theoretically have the effect of limiting PAI losses in 1994 to only a little more than 130 billion Lire.

Unfortunately, only some of this is in real money. The larger part instead consists either in projected savings of one kind or another or in bookkeeping wizardry.

Most of the fresh money that does come in will be from a five per cent increase in the TV set license fee (RAI had asked for 15 per cent) and an increase in the proportion of the fee the broadcaster is permitted to keep once it's collected. These two moves put about 130 billion Life of cash into RAI coffers.

The license fee that RAI pays to the State has also been reduced, and to pay part of its debt to the Italian Treasury has forced RAI's company, state-owned IRI, to shift some of its RAI shares to the Treasury. That means that interest will no longer be paying on the balance due, creating a savings on financial costs.